Tuesday, November 16, 2010

Bonds: Then and Now

Readers know I have been bullish on the long end of the bonds for some time. I have felt we are headed down Japans road, (deflation, contraction, etc) which means lower yields ahead. The land of the blind the one-eyed man is king, blah, blah, blah.

As much as I disagree with 'the bonds are in a bubble' crowd, I also understand the possibility that they could be correct.  In a post I put on back in early Sept this year Bonds.... Yet Again I counted their bubble claims but I also gave quarter in which I stated the following:

"Well I am here to inform you that if the bond market bears are correct and U.S. Treasury market is in a bubble and does implode heaven help us for YOU WILL NEED THAT SHOTGUN, AMMO AND WATER more than your investments for damn sure!

I still believe all debt is either paid back on defaulted upon. We had the mother of all bubbles in debt and credit creation. This is not being paid back. The boat is sinking faster (deflation) than those in charge can pump the water out via money and credit creation (inflation).

I suggest you pray that the U.S. Treasury market holds together or you will need to prepare for Weimar Germany, Argentina, or Zimbabwe or any other example of chaos throughout history. Remember this is just one idiot blogger's simpletonian opinion on the subject."
Here is a chart I have shared with you before. 
Do you remember it? 
The time has come to have another look. 



Do you see the failed rally in bonds into 1931 denoted on the chart as Quality Flight Bonds. My deepest worry, more than all the others I harbor combined (and they are numerous), is that our bond market today is at that same failed rally juncture as the chart above. I truly pray that I am wrong. You can look for yourself below and decide.



I hope I am wrong. The Fed thinks they can force investors into 'the Feds preferred assets'. The Fed's ignorance and arrogance is beyond comprehension, they will enslave us all if sane adults don't appear on the scene soon. One might want to familiarize ones self with insurance policies that go by the names Benelli and Glock. Let's just pray 87.50 holds on the TLT chart but if it doesn't he who panics first will have panicked best.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.61 stop @ $8.04

2 comments:

Anonymous said...

hi there that chart showing the long bond crash was corporate bonds
not long u.s. treasury bonds, if i'm correct...

long u.s. treasury bonds might of had a intra-day or intra-week crash like this past week... [do some research on this subject because its very interesting

watch closely how TLT bottoms with a line chart, if TLT chart pattern begins to look like the bigger Mother pattern bottom 2008-2010 maybe TLT will have bottomed...

Anonymous said...

hi there, that chart [Long Bond]if i'm correct was corporate bonds not long u.s. treasury bonds, this is a very interesting subject about the bond crash of the great depression... please do more research on this subject because its very bewitching

regards